Understanding NFTs: What You Didn't Know About NFTs

Understanding NFTs

Are NFTs the future or just a fad?

When most people hear the term NFT, they likely think of strange cartoonish animals that sell for millions of dollars, and that it's all a scam. Who would pay for images on the internet that you simply could right click and save? While it is true that NFTs have made headlines for their high selling prices in recent years (especially in 2021 following Beeple's 69 million dollar NFT sale which caused interest to explode), this is only the tip of the iceberg when it comes to what NFTs are and what they enable.

Beeple's $69 million NFT
EVERYDAYS: THE FIRST 5000 DAYS, Beeple's 69 million dollar NFT

The opportunity for NFTs to revolutionize creative expression and digital ownership is hard to grasp and we're today only scratching the surface of what's possible. In the coming years, more and more creators will start using NFTs and the blockchain to capture a larger portion of the value they create while giving fans the opportunity to take part in their success and upside.

After all, there is a reason why large companies such as; Nike, Adidas, Lamborghini, Porsche, McLaren, Tiffany, Prada, Gucci, Louis Vuitton, Burberry, Dolce & Gabbana, L'Oreal, Lacoste, Shopify, Starbucks, Show, Coca-Cola, Pepsi, Budweiser, McDonald's, Taco Bell, TIME Magazine, Nickelodeon, Marvel, Playboy, Samsung, Napster, MLS, NFL, NHL, NBA, Australian Open, FC Barcelona and Manchester United have entered web3 and the NFT space. They have started to realize there is a new technology that allows them to connect and create value for their customers in a way that was not possible before NFTs.

It might be worth giving NFTs a try, something you're unlikely to regret in retrospect.

Tiffany & Co. NFT collection. A collection of 250 pendants that were available to owners of CryptoPunks

New opportunities unleashed on a global scale

At its core, an NFT is a type of digital asset that is verified via blockchain technology. An NFT is unique, cannot be replicated, and has a clear record of ownership. While this may not sound like a big deal, it has already started to change the way we think about digital objects and ownership of those.

NFTs can be used to create digital scarcity and guarantee authenticity, enabling true digital ownership. This means that NFTs have the potential to unlock new opportunities in most sectors, on a global scale. This has started within, among others, digital art and collectibles, tokenized real assets (e.g, a house sold as an NFT), virtual objects in games and music.

House sold in the US using NFT technology
House in the US sold using NFT technology

These NFTs are generally represented by images (like those Apes you have seen in the media). Of course, you can still right-click and save any image representing an NFT. However, all NFTs can be verified by anyone via the blockchain, prooving authenticity and provenance. And we all know that originals are more valuable than copies. Even you who think you can right-click and save an NFT, maybe feel it would be awesome to own something authentic from your idol, something you can show off to the world on a daily basis while everyone can see that it's the real thing?

This opens up a world of new possibilities. E.g., digital art can be created, bought and sold like traditional art, BUT there is no need to store valuable works of art in a Swiss cellar, and no need for transport when it is time to sell. Instead, your NFTs can be shared with the world daily and when you want to sell it, you just connect your wallet to an NFT marketplace and list it or make a peer-to-peer deal with someone willing to pay the right price.

Value is created by the people involved

Imagine buying an NFT that gives you access to a community of like-minded people. This can be a group of football fans, artists, gamers or fans of a certain TV series. By owning that type of NFT, you have a connection to this community that goes beyond simply following this community on social media.

What you didn't know about NFTs
What many people think you get when you buy an NFT vs. What you actually get when you buy an NFT

You become part of an exclusive group that shares a common passion. NFTs serve as a way for fans and customers to connect with creators, artists and companies. Imagine owning an NFT that gives you the opportunity to chat one-on-one or meet your favorite artist or childhood idol, or an NFT that gives you access to a community of football fans where you can engage in conversations about the latest game or discuss stories with other fans from the whole world, while actually owning a part of it all through the NFT you and the others have bought. Something that can be considered truly priceless!

A creator or a company can create unique experiences for those who own a particular NFT. This can include exclusive access to live events or virtual meet-ups, going behind the scenes experiences, access to a limited edition product, discounts on merchandise, and more.

Starbucks Odyssey
Starbucks Odyssey, a series of fun, interactive activities to collect 'Journey Stamps' (NFTs) that unlock benefits and experiences

Additionally, the creator of an NFT can offer their NFT holders the opportunity to collaborate on a project or allow them to be included in future works or experiences the creator creates. Web3 record label Hume Collective enables fans who own particular NFTs to participate in and guide the creation process of their virtual artists (metastars), such as voting on which song should be the next single an artist releases. By building a community around NFTs and the people who buy these NFTs, creators can both get paid for their work and at the same time have the opportunity to establish a relationship with their most loyal fans. At the same time, a sense of exclusivity and community is created around their work, creating excitement for the fans.

Hume Collective music NFTs
By owning a Hume Collective NFT, holders can help influence the future of virtual artists

NFTs empower creators and contribute to charitable causes

The creator economy has welcomed NFTs with open arms. Now creators can own the relationships with their fans and more quickly identify their superfans willing to pay for what their idols create. At the same time, creators get to keep a larger share of their revenue when they don't have to use intermediaries or license agreements. Creators gain more control over their work while gaining direct contact with their fans, allowing them to focus on what they do best instead of negotiating deals.

Since fans, by buying a creator's NFT, get a share in the creator's future upside, enthusiastic fans can drive marketing which kick-starts a journey towards increased interest, larger audience and increased sales for the creator which in turn can lead to that those who bought the creator's first NFTs see these increase in value. NFTs create long-term incentives, aligned with both creators and their fans.

What about the financialization aspect, that there always are financial interests? That's obviously a part of it all. However, there are also positive aspects to it, when someone feels ownership and skin in the game it creates incentives for the people involved. At the same time, NFTs can be used to support charitable causes. Creators can create an NFT collection and donate the proceeds to a cause they care about. This also contributes to increased awareness and commitment to the charitable cause on a global scale, all of which is enabled by the blockchain and NFTs. Over the past year we have seen people in the crypto and NFT space create NFTs, sell NFTs and donate crypto - raising millions of dollars for, among others, victims of the war in Ukraine and to victims of the earthquake disaster in Turkey-Syria.

Ukraine Dao NFT
Ukraine Dao sold an NFT of the Ukrainian flag raising 6.75 million dollars for the victims of the war

This post highlights a few examples of what NFTs enable. As the technology continues to evolve, we can expect to see many more innovative use cases developing and thereby there will be many opportunities to take part in.

Don't dismiss NFTs until you have given it a shot - most likely you won't regret it…

The next time you or someone you know dismisses NFTs as nothing more than images of strange cartoonish animals, remember that there is much more to this technology than meets the eye.

If you're new to the NFT world, now is the perfect time to jump in and explore what all the fuss is about. One thing is for certain: NFTs and its technology will continue to shape our world.

NFTPORTAL is ready to guide you through the disputed and fascinating NFT space.


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